The Australian share market is a great place to generate a passive income. This is thanks to the bourse being home to a large number of ASX shares that reward their shareholders with dividends every six months (sometimes even more frequently).
But unless you need this income now, you can keep the money in the share market to harness the power of dividend investing and create even greater payouts further down the line.
The key is to buy ASX shares that pay dividends, the larger the better, and then reinvest these funds into the share market to take advantage of compounding.
Compounding is what happens when you generate returns on top of returns. It explains why a 10% average annual return will double your money in just over 7 years, triple it in a little over 11 years, and quadruple it in a touch over 14 years.
In fact, the longer you hold on and generate these returns, the shorter the time it takes to earn 100% of your original investment back again. It's like your own personal money printing machine, but legal!
With all the above in mind, let's take a look at a couple of ASX dividend shares with big yields that have been tipped as buys by analysts.
Dalrymple Bay Infrastructure Ltd (ASX: DBI)
Dalrymple Bay Infrastructure could be a high-yield ASX dividend share to buy according to analysts at Citi. Its analysts have a buy rating and $2.80 price target on the shares of the operator of the Dalrymple Bay Coal Terminal (DBCT).
Citi is also forecasting dividends per share of approximately 20.6 cents in FY 2023 and 21.6 cents in FY 2024. Based on the latest Dalrymple Bay Infrastructure share price of $2.73, this will mean generous yields of 7.5% and 7.9%, respectively.
Westpac Banking Corp (ASX: WBC)
The recent banking crisis has put a lot of pressure on the big four banks. That's despite them having some of the strongest balance sheets and capital positions that you will find globally.
This could be an opportunity for investors to pick up this high-yield ASX dividend share at a very attractive price. For example, Goldman Sachs has a conviction buy rating and $27.74 price target on its shares.
The broker is also expecting Australia's oldest bank to pay fully franked dividends of 147 cents per share in FY 2023 and 156 cents per share in FY 2024. Based on the current Westpac share price of $22.25, this will mean yields of 6.6% and 7%, respectively.
